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Riding the Roller Coaster of Investments: The Truth You Don’t Normally Hear

Chris Hogan is America’s voice on retirement. He helps spread Dave’s message of financial hope to audiences everywhere. An engaging and humorous speaker, Chris is an expert on subjects like mortgages, healthcare and investing. He knows how money works, and he has a passion for helping families prepare for retirement. Chris has become a sought-after speaker who loves to challenge, empower and inspire audiences. His new book, Retire Inspired: It’s Not an Age; It’s a Financial Number hits shelves in January. Here is an excerpt from his upcoming book.

When I talk about the ups and downs of the stock market, I think about roller coasters.

That’s a great picture of the typical movement of the market. When you get on a roller coaster, you have to be prepared for the hills and drops. You have to be ready for those turns you aren’t expecting. And you have to understand what you’re getting into before you’re locked into your seat. Once that ride gets going, you can’t get off. You can’t hit a stop button, and you don’t want to try to step off mid-ride. It wouldn’t be a pretty sight.

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Do you know what I’ve noticed about roller coasters? If you hold on and stay seated, you’ll have a wild ride, but you’ll end up safely where you want to be. If you hold on and see the ride through to the end, you come out just fine. But if you try to jump off early, well, you’re going to get hurt.

The same is true of the market. When you start investing, you have to be emotionally prepared for it to go up and down. If you’re not prepared for that, you’ll make one of the biggest mistakes when it comes to investing: jumping out at the wrong time.

The Big Picture

If you try to keep your eyes glued on each hill, drop, twist, and turn in your investments, you’ll stay in continual panic mode. You’ll never be able to relax and leave your investments alone. But long-term investing only does its magic if you leave your money untouched over a long period of time. Trying to “time the market” is a fool’s game.

That’s why you have to keep some big-picture perspective. You can make the market look a certain way if you zoom into one small section of it. If you look at the big picture, though, you can see that the market is moving up over time.

Let’s talk about two historical ups and downs on the market roller coaster in recent history. If we zoom in on early September 2001, we’d see the market going up. That changed dramatically on September 11, when the markets experienced a major drop as a result of the terrorist attacks in New York City, Washington, D.C., and Pennsylvania. When the markets reopened, panicked investors pulled their money out of their investments. Every headline and lead story focused on how terrible the financial situation looked. Investors weren’t given much hope, and a lot of people made bad decisions as a result.

Here’s what didn’t get nearly as much press: just two months after September 11, the markets had returned to September 10 levels. The market corrected itself fairly quickly.

Let’s look at the market crash of 2008. Before the crash, the market looked pretty strong. During the last quarter of 2008, though, the market took a serious nosedive. It took a while to recover from this one, but within a couple of years, the market was better than it was before the crash. If you zoomed in only on that last quarter, the market looked terrible. And if you zoomed in only on the recovery, it looked amazing! Neither perspective gives you the entire picture. You have to look at the whole thing—the 70-plus-year history of the stock market (or at least since the merger of S&P in 1941). When you do that, you’ll find that 100 percent of the 15-year periods in the market’s history have made money.

The big-picture view of the stock market shows that, if you leave your money alone for a long period of time and invest with the long term in mind, you’ll come out ahead. It’s up to you, though, to climb in, strap in, hang on, and not jump out!

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Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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